Medicare Premiums Projected to Increase by 50% in 2027
Medicare enrollees face a potential 50% rise in average monthly premiums for stand-alone prescription drug plans by 2027, according to new KFF analysis.
The Kaiser Family Foundation (KFF) report forecasts a jump in average premiums from $34 in 2026 to $51 in 2027. With this substantial increase, Medicare beneficiaries may need to reassess their plan options during the current open enrollment period, which runs through December 7. Shopping around for personalized plans could offer more economical alternatives, as premiums for Medicare Part D vary significantly, ranging from $6 to $204 in 2027 across eight national plans.
Impact on Medicare Advantage Plans
For those enrolled in Medicare Advantage plans, which combine traditional Medicare with prescription drug coverage, the situation is different. The average monthly premium for drug coverage in these plans is expected to rise modestly, from $7 to $9. Currently, around 31 million people have prescription drug coverage through Medicare Advantage, compared to approximately 25 million with stand-alone Part D plans.
While the KFF figures are based on June enrollment data and assume enrollees remain in their current plans, the Centers for Medicare and Medicaid Services (CMS) suggests a smaller increase to $36. This CMS estimate assumes consumers will switch plans to minimize costs, highlighting the importance of reviewing coverage options during open enrollment.
Additional Costs and Structural Changes
Beyond premiums, other expenses like deductibles are poised to rise. KFF projects the average deductible for stand-alone plans will climb from $540 to $643 by 2027, and Medicare Advantage plan deductibles will increase from $360 to $489. Additionally, a move towards coinsurance models signals a shift in cost-sharing, with enrollees paying a percentage of drug costs, rather than fixed copayments.
Projected Changes in Average Costs
| 2026 | 2027 (Projected) |
|---|---|
| Premium: $34 | Premium: $51 |
| Deductible: $540 | Deductible: $643 |
Legislative and Market Influences
Changes in Medicare costs are also influenced by recent legislative measures like the Inflation Reduction Act, introducing a $2,000 out-of-pocket cap effective in 2025, which will rise to $2,100 in 2026. These caps aim to provide more comprehensive cost protection for beneficiaries. However, the expiry of previous subsidy programs has limited federal expenditure on Medicare drug plans, contributing to increased premiums.
Juliette Cubanski, KFF's Medicare policy expert, emphasizes the necessity of reassessing coverage choices to control costs. As Medicare recipients navigate through these changes, careful decision-making during open enrollment will play a crucial role in managing premiums and avoiding unexpected cost hikes in the coming years.